STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2014

Share-based Compensation, Allocation and Classification in Financial Statements [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

A complete description of the Company's stock-based compensation plans can be found in Note 20 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Employee Stock Purchase Plan

The Company grants stock-based compensation to employees under The Dow Chemical Company 2012 Employee Stock Purchase Plan (the "2012 ESPP"). Under the 2014 annual offering of the 2012 ESPP, most employees were eligible to purchase shares of common stock of the Company valued at up to 10 percent of their annual base salary. The value is determined using the plan price multiplied by the number of shares subscribed to by the employee. The plan price of the stock is set at an amount equal to the lower of at least 85 percent of the fair market value of the common stock on a date or the average fair market value of the common stock over a period, in each case, specified by the plan administrator.

During the first quarter of 2014, employees subscribed to the right to purchase 3.6 million shares of the Company's common stock with a weighted-average exercise price of $38.13 per share and a weighted-average fair value of $5.45 per share under the 2012 ESPP.

Stock Incentive Plan

The Company also grants stock-based compensation to employees and non-employee directors under The Dow Chemical Company 2012 Stock Incentive Plan (the "2012 Plan"). Most of the Company's stock-based compensation awards are granted in the first quarter of each year. During the first quarter of 2014, the Company granted the following stock-based compensation awards to employees under the 2012 Plan:

• 3.2 million stock options with a weighted-average exercise price of $46.71 per share and a weighted-average fair value of $11.49 per share;

• 2.2 million shares of deferred stock with a weighted-average fair value of $46.71 per share; and

• 2.4 million shares of performance deferred stock with a weighted-average fair value of $54.42 per share.

The Company did not grant stock-based compensation awards to non-employee directors in the first quarter of 2014.

Beginning in March 2014, the Company began issuing treasury shares to employees for shares purchased under the 2014 annual offering of the 2012 ESPP. The Company may also issue treasury shares for options exercised and for the release of deferred and restricted stock.

Total unrecognized compensation cost at March 31, 2014 is provided in the following table:

Total Unrecognized Compensation Cost at March 31, 2014
In millions	Unrecognized Compensation Cost		Weighted-average Recognition Period (Years)
ESPP purchase rights	$	10	0.63
Unvested stock options	$	90	0.85
Deferred stock awards	$	159	1.00
Performance deferred stock awards	$	136	0.99